Real estate tax
Opportunity zones
Every other exit strategy defers the tax; the opportunity zone is the only one that can erase part of it, and the only one with a hard calendar that blows the benefit on a technicality.
Every other exit strategy in real estate defers the tax. The opportunity zone is the only one that can erase part of it. Hold a qualifying investment long enough and the gain you rolled in gets a basis step-up, and the new gain the fund itself earns can come out entirely tax-free. That is a different thing from a 1031, which only postpones the day of reckoning. Here the reckoning can partially not come.
The catch is that the rules are unforgiving on timing and mechanics, and the program has a hard calendar. These pages cover what actually qualifies, how the fund has to be built to hold up, how the math compares to a 1031 you might do instead, and the specific ways the benefit gets blown, missed deadlines, bad fund structure, a property that never gets improved enough to count. The upside is real. So is the number of investors who qualified for it and lost it on a technicality.